Big Returns In The Smallest Packages

Micro-cap funds can produce an oversized payoff for investors

clients invest in small-cap funds rather than micro-caps,” says Robert Pagliarini, a certified financial planner and executive vice president with Allied Consulting Group in Los Angeles. “The companies in small-cap funds aren’t quite as risky as micro-caps because small-caps can own companies with market caps of up to $1 billion.” Micro-cap funds generally restrict holdings to companies with a market cap of $350 million or less.

Small-cap funds also offer the possibility of outstanding returns. Says Pagliarini, “Our current favorite, Third Avenue Small Cap Value (TASCX), usually keeps 10% to 20% of its assets in micro-caps so investors have some exposure to those stocks.” Lutton, too, says that while there are no micro-cap funds on her “pick” list, she favors Royce Total Return (RYTRX), a small-cap fund that may hold around 15% of its assets in microcaps.

Whether you prefer to buy small or extra-small, mutual funds that hold little companies can deliver sizable returns. If you can stand the risk of a steep slide now and then, putting a pinch of micro-caps in your portfolio can pump up your long-term profits.

Top Retail Micro-cap Funds by 3-Year Return

Fund Name

Ticker

Category

1-Year
Return*

3-Year
Return*

5-Year
Return*

Geometric
Market Cap
Average in $MM

Min. Initial
Purchase

Phone

Perritt Micro Cap Opport PRCGX Small Blend 60.83% 23.92% 20.22% 158 $1,000 800-332-3133
Satuit Capital Micro Cap SATMX Small Blend 61.23 20.51 NA 289 $1,000 800-567-4030
Tamarack Enterprise A TETAX Small Blend 41.82 18.87 15.44 317 $1,000 800-422-2766
Aegis Value AVALX Small Value 37.66 18.64 19.62 236 $10,000 800-528-3780
Perkins Discovery PDFDX Small Blend 61.45 16.57 17.53 69 $2,500 800-998-3190
Tamarack Micro Cap Val A TMVAX Small Value 56.51 16.21 14.80 329 $1,000 800-422-2766
Munder Micro-Cap Eqty A MMEAX Small Growth 66.78 14.98 17.26 343 $2,500 800-468-6337
Corbin Small-Cap Value CORBX Small Value 32.15 11.81 6.07 118 $2,000 800-924-6848
TA IDEX TA Sm/Md Cp Val A IIVAX Small Value 56.55 11.76 NA 282 $1,000 888-233-4339
Gabelli Westwood Mighty A F009PB Sm
all Value
28.48 10.75 12.48 157 $1,000 800-422-3554
Source: Morningstar Inc. Morningstar makes every effort to ensure the completeness and accuracy of this data but cannot guarantee it. Micro-caps are defined as funds with geometric average market caps of $350 Million or less. returns through April 30, 2004.
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